U.S. bank regulators yesterday disclosed how eight of the nation’s largest banks would wind themselves down in the face of collapse and gave American International Group Inc. and Prudential Financial Inc. an extra year to submit their doomsday plans, Reuters reported. The Federal Reserve and Federal Deposit Insurance Corp. (FDIC) posted the public portions of “living wills” submitted by banks including Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc. Introduced in the wake of the global financial crisis of 2007-2009, the plans outline how banks would go bankrupt without needing a taxpayer bailout. Regulators will scour the documents to make sure they are credible. Under the 2010 Dodd-Frank Act, the federal government has the power to carve up a bank if regulators do not believe its plan is workable and in recent years they have faulted more than a dozen banks for drafting overly optimistic or not credible plans. The Fed and the FDIC gave insurers AIG and Prudential Financial until the end of next year to submit their living wills from an original deadline of the end of 2017. The extension was given to enable the companies to incorporate any guidance regulators may provide on their plans.
